You may not think your practice is declining. However, after working with thousands of practices over the last 40 years, I can report that many dentists have been shocked when all of a sudden their practice moved into a declining state. The question is not whether you will ever face a declining situation, but whether you are prepared.
What is a turnaround?
There are business school courses on the concept known as turnaround. The word turnaround is a good description of exactly what has to happen when a business (dental practice) is declining in revenue and profit and needs to reverse that trend quickly before it gets too severe.
How do you turn around a declining practice?
Academically it is good to know how to turn around a practice even if you never have to do it. In the event that you do, the key is to focus on one statistic—production. How far is production down and what will it take to bring it back?
Start with the question, what will increase production the fastest? In a turnaround, you need a sense of urgency, and I’ve often been surprised at dentists who have contacted Levin Group that waited several years or more before recognizing that their practice would not improve automatically and needed a turnaround. The starting point in a turnaround (which is different than a well-planned consulting program) is to move as quickly as possible with the biggest impact strategies to increase practice production. As the saying goes, you have to stop the bleeding.
That means that you don’t fix everything possible and maybe not even in a regimented way. It means triage or emergency treatment. You need to identify one or more strategies to immediately increase production, and if there is a specific reason for the decline, address that reason. Declines can come from three basic sources, and all require a turnaround approach and turnaround strategy.
The three basic sources of practice decline are:
- The practice just went along paying no attention to protecting its future while the external environment was changing around it. This could mean flat or declining insurance reimbursements, new practice competition, opening of DSOs nearby, an economic downturn, the loss of a major business in the community, or even a reputational issue.
- The dentist or owner made a severe strategic mistake. Examples include overspending on new technologies or a new office, out of control overhead with general spending, the loss of one or more key team members, the retention of team members that are underperformers, etc.
- Not having specific measurements. I have to admit that at this point in my career, I am amazed by how many dentists still don’t know their numbers. If you are running a business and do not know your numbers, then you are not truly running a business. I have opportunities every week to speak to dentists who are interested in practice improvement but do not actually know their numbers. This can be easily overcome by evaluating software reports. In a turnaround, specific targets have to be set for both the doctor and the team.
Summary
Turnarounds are possible. As I mentioned above, I hope you never have to deal with one, but by reading this article you’ll have a better sense of what could lead to the need for a turnaround and possibly how to avoid it. In the event that you have to face one, you now know the general playbook and direction to go.
Editor's note: This article originally appeared in DE Weekend, the newsletter that will elevate your Sunday mornings with practical and innovative practice management and clinical content from experts across the field. Subscribe here.
